Hi pals,
Am exploring repayment options for my federal student loans and am torn between the SAVE (Saving on a Valuable Education) plan and the PAYE (Pay As You Earn) plan. I’d love to hear from those who have experience with either (or both!) of these plans.
hi meg my reviews,SAVE typically provides reduced payments throughout the loan’s duration, whereas PAYE has a shorter period of interest subsidy. Evaluate your financial circumstances and loan amount to select the plan that aligns best with your needs!
The primary cause is PAYE, which forgives graduate loans after 20 years. 25 years is SAVE for graduate loans.
The choice between the SAVE and PAYE repayment plans for student loans largely depends on your financial situation and future plans.
The SAVE plan, introduced in 2023, is generally more beneficial for borrowers with lower incomes or those with significant undergraduate debt. It offers lower monthly payments (5% of discretionary income for undergraduate loans) and provides interest subsidies that prevent your loan balance from growing if your payments don’t cover the interest. This plan is particularly advantageous if you anticipate having a lower income over a longer period
On the other hand, PAYE caps payments at 10% of your discretionary income and offers loan forgiveness after 20 years of qualifying payments. This plan can be more beneficial for borrowers with higher earning potential or those who prioritize quicker loan forgiveness.
Ultimately, SAVE may be better if you need immediate payment relief and have lower income expectations, while PAYE might be preferable for faster forgiveness if you expect a higher income trajectory.